NYSE Euronext Commission Head Warns On Corp-Governance Reforms
By Jacob Bunge, Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- The U.S. should be careful not to restrict risk-taking
and capital-market access with proposed corporate-governance reforms, according
to the head of a new commission backed by NYSE Euronext (NYX) and some of the
nation's largest companies.
Outrage over executive pay and risk-management issues laid bare by the
financial crisis must be addressed, but new rules can't make it harder for
executives to make decisions and shouldn't bog down board operations, according
to Larry W. Sonsini, chairman of NYSE Euronext's Commission on Corporate
Governance.
"I fear if we over-regulate risk, we will over-stagnate growth," said Sonsini,
also chairman of law firm Wilson Sonsini Goodrich & Rosati.
"Right now the concern is, let's not burden corporate America with
overregulation on governance principles and lose sight of the effectiveness and
competitiveness we need for our companies on a global basis," Sonsini said in an
interview. "Let's be sure that through this regulation we're not burdening the
liquidity and transparency of our capital markets."
NYSE Euronext is fielding the group, which includes executives of Exxon-Mobil
Corp. (XOM), International Business Machines Corp. (IBM), General Electric Co. (
GE) and Goldman Sachs Group Inc. (GS) alongside pension-fund officials and legal
experts.
The commission will add its voice to a debate that has gathered momentum in
Washington and boardrooms around the country as investors seek to hold
executives and boards of directors accountable for actions that, at worst, fed
into the economic meltdown, or at best, look irresponsible in retrospect.
The Securities and Exchange Commission is taking aim at a variety of
corporate-governance issues, and earlier this month lawmakers moved to expand
the regulator's say in how board elections are carried out.
In an interview, Sonsini said that the intense focus on executive compensation
will bring more transparency and increased efforts to tie pay to company
performance, but shareholders' recent efforts to gain a direct say in how much
senior executives get paid is "something we need to look at."
Stockholders of networking company Cisco Systems Inc. (CSCO) last week
approved such a resolution, which will let them vote on executive pay every
year, following similar measures taken at Apple Inc. (AAPL) and Microsoft Corp.
(MSFT).
Such proposals have been pushed by activist shareholders--often big fund
companies seeking changes in company policy or board makeup--which Sonsini said
have also altered the way board elections are conducted, with many companies
adopting majority voting for directors.
"What's happening in governance is that there's a meshing, so to speak, of
stockholders and directors, and roles are starting to clash," he said. "The
approach I have in mind is getting back to fundamental principles."
Advocates for corporate-governance reform have also called for board
committees dedicated to risk management, another idea the NYSE Euronext
commission will examine, according to Sonsini.
The commission may eventually issue recommendations to NYSE Euronext, which
carries corporate-governance requirements in its listing rules. It is possible
the commission also would share its findings with the SEC.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com
(END) Dow Jones Newswires
11-19-091514ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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